Stock Options Commentary and More

Medtronic Inc Attracts Large Call Buyer (MDT)

While the majority of the options action today has been in puts, one trader is making a large, bullish options bet on Medtronic Inc (MDT). The trader bought over 6,100 January $70 calls for $1.43 a piece. The value of that transaction is approximately $872,000.

This big buy comes at at time when the stock of Medtronic (MDT) is trading at just $63.83. It’s up 22 cents so far today. Clearly this trader is expecting some kind of material news to come out long before these $70 calls expire in mid/late January. Medtronichas traded in a range of $51.22 to a high of $65.50 over the past year, and is currently trading at price of 21 times earnings. So what does this trader know, that no one else seems to know?

Upcoming Catalysts for Medtronic, Inc. (MDT)

Medtronic is scheduled to release Q1 2015 earnings results on August 19, 2014. Last quarter’s earnings were $1.12 per share, while the consensus estimates for Q1 is just 92 cents. There are 21 analysts currently covering the company, with an average rating of BUY. They have a price target of $71 currently. It’s quite possible the buyer of all these calls is in the know about an upcoming analyst upgrade and / or price target increase. This is quite plausible, mainly because it happens so often, and because it looks like MDT is due for an upgrade. It’s all part to the game.

Of course, it is entirely possible that some earnings numbers have leaked and the trader is acting on this knowledge.

At this time, there is no news to explain this large call option buy in Medtronic, Inc. MDT. We’ll keep our eye out, and will also buy a few contracts as well. Here’s the chart: